1 May 2015
EUR/USD might see a correction lower – FXStreet
FXStreet (Barcelona) - FXStreet Editor and Analyst, Omkar Godbole, views that EUR/USD might see a correction lower towards 1.1114 if the pair drops below 1.1188.
Key Quotes
“The pair rose for the sixth consecutive sessions, to print an intraday high of 1.1264 on the back of a sharp rise in the German yields. A sell-off in the German bonds is leading to unwinding of short EUR trades initiated for currency hedging by foreign investors. Though, I believe its effect has played out, the EUR would still remain resilient as the German yields are unlikely to dip to record lows in the immediate future. Moreover, Germany had negative yields on bonds maturing up to 8 years.”
“However, the situation has changed now, with Germany having yields negative on bonds maturing up to 5-years.”
“Given the trading holiday across the Eurozone, the pair is likely to take cues from the action in the EUR/GBP cross today.”
“The pair currently trades at 1.1219, after having ended the previous session well above 1.1188, which is 161.8% Fib expansion level of the move from 1.0519-1.0847-1.0658.”
“Fresh bids are seen anywhere between 1.1188-1.12 with the immediate gains capped at 1.1268 (Feb. 9 low). A break above the same could expose the area around 1.1318.”
“However, the overbought daily RSI could make a further upside journey difficult. Thus, a technical correction could be seen in case the pair breaks below 1.1188, thereby opening doors for a drop to 1.1114.”
Key Quotes
“The pair rose for the sixth consecutive sessions, to print an intraday high of 1.1264 on the back of a sharp rise in the German yields. A sell-off in the German bonds is leading to unwinding of short EUR trades initiated for currency hedging by foreign investors. Though, I believe its effect has played out, the EUR would still remain resilient as the German yields are unlikely to dip to record lows in the immediate future. Moreover, Germany had negative yields on bonds maturing up to 8 years.”
“However, the situation has changed now, with Germany having yields negative on bonds maturing up to 5-years.”
“Given the trading holiday across the Eurozone, the pair is likely to take cues from the action in the EUR/GBP cross today.”
“The pair currently trades at 1.1219, after having ended the previous session well above 1.1188, which is 161.8% Fib expansion level of the move from 1.0519-1.0847-1.0658.”
“Fresh bids are seen anywhere between 1.1188-1.12 with the immediate gains capped at 1.1268 (Feb. 9 low). A break above the same could expose the area around 1.1318.”
“However, the overbought daily RSI could make a further upside journey difficult. Thus, a technical correction could be seen in case the pair breaks below 1.1188, thereby opening doors for a drop to 1.1114.”